Chapter 13 Money (Macroeconomics) – Flashcards

any good that is widely accepted in exchange of goods and services. -comes in all shapes and sizes because it is defined as a function, not form

Exchange of goods and services for other goods and services WITHOUT use of money

find someone that is selling the same thing

1. Medium of Exchange 2. Unit of Account 3. Store of Value

-Using money, exchange is less time consuming and is easier than barter. -Avoids the "double coincidence of wants." example: buying somethimg

Common measure (yardstick)of relative value of all goods and services example:two and a half markers= 1 water bottle

Money is one of the goods used to hold wealth over time. Example: Savings Account

the U.S. Mint

The Federal Reserve

Bureau of Engraving and Printing (BEP)

Federal Reserve to BEP to the Federal banks

-Legal ledger -money backed by public faith in its universal acceptance

Face value of money- cost of supply

Acquire funds from savers and then lend these funds to borrowers -Depository institution -Mutual funds -Insurance companies

Institutions that accept and maintain deposits and make loans Have the ability to create and destroy money -Commercial banks -Savings and loan associations -Savings banks -Credit Unions

-Banks only hold a fraction of your money and lends the rest to borrowers -this system can work only because not everyone demands their money back at the same time

Occurs when a bank cannot pay its depositors. Can result from fear about bank's financial health.

Guarantees deposits up to $250,000 per person per bank in case of bank failure.

-Dual banking system -

Federally charted National banks and state charted State banks -before 1930s: less regulation -After 1930s: Heavy regulation -Since 1980s - 2009: deregulation -Since 2010- stronger supervision and regulations of the entire financial system -Present structure- fewer large banks with many branches.

-is the regulatory agency i.e. central bank in the U.S. monetary system -Establish by congress with the federal Reserve Act in 1913

1.American People and firms 2. Depository Institutions 3. federal reserve 4. Federal Open Market Committee (FOMC) 5, Board of Govenors

-including chairman, appointed by the President is the governing body of the Fed. *-Current chairwomen= Janet Yellen

+ 25 branch banks

Consists of 12 members: in charge of monetary policy= 7 governors + NY Fed President +other 4 Fed Presidents

-Supply the economy with paper money. -Control the money supply= monetary supply -Provide check-clearing services -Hold Depository institutions' reserves -Supervise member banks -Serve as the 'lender of the last resort' to depository institutions -serve as Government's banker -Serve as fiscal agent for the Treasury